Reliance stock has historically outperformed pre-AGM

NEW DELHI: Historically, Reliance Industries Limited (RIL) has made key announcements on value unlocking catalysts and future growth plans in their AGM, BofA Global Research said in a note.

“We expect similar announcements this year, especially around Jio Financial Services (JFS), clean energy and digital business. RIL stock has historically outperformed going into the AGM on most instances”, the report said.

RIL is in the new list of 10 quarterly stock recommendations among Asia Pac companies based on the view that these stocks could have the most significant market and business-related catalysts in the quarter ahead, BofA said.

On the listing of JFS, the report said RIL has indicated that they intend to spin-off the financial services arm and have already indicated the demerger process. By separating financial services from the core business, RIL appears to be keeping arm’s length transaction from other entities, and in theory helping them better to attract strategic or JV partners who are keen only in financial services arm-like what they did with Jio or tower InvIT. Media articles indicate that listing may happen by Sept-Oct 23.

With Jio making investments in 5G, we see further room for the company to gain market share, mainly at the expense of VIL. Furthermore, any better-than-expected revenues in fiber broadband or digital initiatives could surprise positively.

RIL is the only retail company that is present in a strong position across all 3 formats - modern trade, online (mainly grocery & fashion) and unorganised B2B market. The company is also foraying into “highmargin” niches like chocolates, cosmetics, beverages by making acquisitions.

With improving scale, we also expect the EBITDA momentum at this business to remain strong, the report said.